A Labour-led government will only survive the challenge of the next five years if it empowers people to shape the public services they use, according to a new pamphlet written by two of the party’s rising stars.

The intervention of Liz Kendall and Steve Reed, two junior ministers, published on Friday amounts to a last-minute push to sharpen the Labour manifesto on devolution and public service reform, and draws on recent innovations in service delivery, including handing people personal budgets.

The duo’s thinking has the strong support of Jon Cruddas, the chair of the Labour party policy review, but his blueprint to shed the model of the top-down state has met strong internal resistance.

The authors frankly admit that too many public services are still not good enough and that they assume a type of parent-child relationship in which politicians and the state cast themselves as the superhero capable of solving society’s problems.

Labour MP Liz Kendall. Photograph: Richard Gardner/Rex Features

Kendall says: “The biggest change here is central politicians letting go – understanding that future politicians are not going be spending all their time legislating and regulating from Whitehall. That is not going to help us meet the challenges we face as a country”.

The MP for Leicester West is becoming tipped by some as a possible future party leader, and this week was confident enough to publicly rebuke the former health secretary Alan Milburn.

She argues: “The state will have to learn to let go, and allow public services to be built round people rather than the institutions that provide them. It’s not good enough just to put a patient on a primary care trust board and call that involvement.”

Reed, a former council leader in Lambeth in south London, where he rebranded the authority as a “co-operative” council, insists the empowerment agenda is real, and not just a piece of local authority branding.

The MP, who is also a shadow home office minister, argues that there is an inequality of power about who is taking decisions and the extent to which people are involved in those decisions. He said: “The state identifies you as a problem, sends out a laser beam from Whitehall into your life, and switches off when it thinks it has fixed it. That is a very isolating model.”

The two also argue that their thinking goes beyond Blairite and Brownite agendas. “There are people who in a million years would never call themselves Blairites that support this agenda. It transcends the left-right divisions of the past,” Reed said. “The new division is between the people that want to hoard power here in Westminster and those that understand that equalising and distributing power gives you far better outcomes.”

In their pamphlet, published by the Labour group Progress, Reed and Kendall argue there is now new experience in local government that will be at the centre of the party manifesto being drawn up with the help of Cruddas.

In a separate speech, Cruddas insisted this was the new direction: “Some of our public services have pursued ‘value for money’, and ‘customer satisfaction’, but neglected the human relationships and trust that lie at the heart of public services,” he said.

“Public sector reform has failed to give frontline staff and users a sense of ownership and control. Instead it has transferred power from an unaccountable state to unaccountable big corporations. Too much power has been concentrated in the market and the state. There is too little accountability, and too little transparency.”

The emerging Labour grouping also has advocates in local government. Jim McMahon, the youthful leader of Oldham council – and, at the age of 34, Labour’s leader in the Local Government Association – insists: “Local government has moved at a rate of knots that has left other government departments in the dust.”

He too believes the Labour party needs to relax the centralist stranglehold on local authorities.

“Labour is still hung up about the language of postcode lotteries because we are scared of different places receiving different services. But actually the communities across England are so complex that you could not even have a one-size fits-all for Greater Manchester,” he said.